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Manulife CEO rails against Portus-How did Manor just walk away?

Date: Friday, May 6, 2005
Author: Wojtek Dabrowski and Barbara Shecter- Financial Post

It is "scandalous" that Boaz Manor, Portus Alternative Asset Management Inc.'s co-founder, was allowed to leave Canada for Israel, says Dominic D'Alessandro, Manulife Financial Corp.'s chief executive.

Speaking after his company's annual general meeting, Mr. D'Alessandro also said securities regulators would be more effective if they had "teeth" with which to pursue "bad apples" rapidly.

It was Manulife Securities International Ltd. (MSIL), a Manulife subsidiary, that referred approximately $240-million of its clients' assets to Portus, the collapsed hedge-fund firm. In exchange, the firm and its agents earned referral and syndication fees.

In March, Mr. Manor left Canada after Toronto-based Portus was put in receivership under KPMG Inc. by the Ontario Securities Commission. KPMG has repeatedly claimed it needs to interview Mr. Manor under oath to fully understand Portus's complicated structure.

"We are exercising every power that's under our umbrella at the moment," said Wendy Dey, OSC spokeswoman, in response to Mr. D'Alessandro's comments about regulators' effectiveness. "It's a serious matter and we've got a lot of resources tied up on it. I would call it a major priority."

But Mr. D'Alessandro questioned how Mr. Manor was allowed to leave the country, telling reporters: "He just walks away and retires to a villa someplace, does that make sense to you?"

Portus, which marketed funds of hedge funds, had approximately $730-million of investor money under management and about 26,000 clients.

Shortly after securities regulators launched an investigation of the firm in early February, the OSC barred it from taking on new business and froze its assets. Portus fired most of its staff and shuttered its downtown Toronto offices later that month. Now KPMG and the OSC are sifting through Portus records to determine how and where Portus placed investors' money. The OSC, as well as the Mutual Fund Dealers Association and the Investment Dealers Association, are also investigating the way investors were referred to Portus by advisers and fund dealers, including MSIL.

Mr. Manor has not been charged with any wrongdoing and, in the past, Portus has said that investor funds are safe.

In its reports to Ontario Superior Court, KPMG drew attention to $238-million in "unexplained" offshore wire transfers and a February wire transfer of $3-million from a Portus account to another bank account, with the beneficiary of the transfer listed as Officers and Directors of Portus Trust.

KPMG referred the matter to the RCMP, which is reviewing the matter to determine whether a criminal investigation of Portus's downfall should be launched, a source close to the probe told the Post. Mr. Manor, through his lawyers in Israel, has said he is willing to be interviewed but would not return to Canada.